Global electricity demand to grow by 4pc through 2027, IEA says

Global electricity demand is expected to grow by 4 per cent - or more than the total consumption of Japan - each year through 2027, but the expansion of low-emissions energy sources should help offset the trend, the IEA said in a report on Friday.

Emerging and developing economies are expected to account for 85 per cent of global demand growth, with China forecast to make up more than half of the gains with a 6 per cent growth rate year-on-year to 2027, the IEA report said.

China's power demand has grown faster than its economy since 2020, spurred by a power-hungry industrial sector and the rapid expansion of electricity-intensive manufacturing of solar panels, batteries, EVs and associated materials, the report said.

Air conditioning, data centres and 5G networks are additional contributors.

"The (data center) sector in various regions has been very substantial in electricity consumption, however on a global scale its still quite limited," lead author of the report Eren Cam told journalists.

"Around 1% of global electricity consumption only comes from data centers as of now, and while growth is expected, it's occurring in different regions at different paces," he added.

The IEA said it expects to release a report on data centres later this year.

India is also expected to account for 10 per cent of the global increase in demand, with robust economic activity and rapidly rising air conditioning.

Expectations for the European Union were revised down from the IEA's July forecast due to a weaker macroeconomic outlook, falling one percentage point to 1.6% growth expected in 2025.

The bloc is not expected to recover to its 2021 demand level until at least 2027 despite growing in 2024 after two years of flagging demand, the report said.

"The impact is definitely not even across Europe," Rystad analyst Fabian Ronningen said.

"In recent years, we have seen countries like Germany and Poland performing below the EU average, which is also expected to be the case going forward," he said.

Low-emissions energy sources such as renewables and nuclear are expected to match global demand growth trends as they continue to edge out coal's share in the power mix, the report said.

Solar is expected to be the second largest low-emissions source in 2027 behind hydropower, while renewables as a whole are expected to eclipse coal-fired generation in 2025 as the polluting resource's share will slip below 33 per cent for the first time in 100 years.